Source:  MEATINGPLACE.COM, 3/10/11

Smithfield Foods Inc on Thursday reported quarterly earnings that far exceeded analyst expectations, and predicted tight supplies of pork and strong export demand would bolster profit in the year ahead.

“Clearly we have been through two years of troubled waters and stormy days. But as we sit here today … I am extremely optimistic about where I think this business is going forward. So from where I sit it looks like sunshine, and all I can see is sunshine,” Smithfield Chief Executive C. Larry Pope told analysts on a conference call. The company’s shares have risen four-fold in the past two years.

While the hog production side of Smithfield’s business still reported a small operating loss for the quarter, despite improved live hog prices, progress is being made on a long-term cost reduction plan, and there is still much room for improvement, Pope said.

Across the industry, he said, supply and demand are in balance.

"I don't see anyone out there looking to build a big plant over the near term. I don't see any expansion of any magnitude on the live production side," Pope said.

Pope predicted export demand would remain strong, with higher pork prices helping to offset escalating feed costs.

“For the quarter, 24 percent of our fresh pork volume went out of the country," Pope said. "Countries like Japan, China, Russia, Korea, Canada, they all have double-digit increases in export volumes."

Smithfield earned $202.6 million, or $1.21 a share, in the third quarter ended Jan. 30, compared with $37.3 million, or 22 cents a share, a year earlier.

Excluding one-time items, the company earned 84 cents a share, far exceeding the 66 cents analysts had forecast, according to Thomson Reuters.

Revenue rose 10 percent to $3.19 billion, above the $3.16 billion average analyst forecast, boosted by higher average unit selling prices in the pork segment and higher live hog market prices.

Profit in the company’s pork unit jumped 67 percent to $254.8 million. The hog unit lost $2.3 million, compared with a loss of $78.3 million a year ago, as higher hog prices helped offset higher feed costs.
Packaged meat brands including Armour LunchMakers, Armour Pepperoni, Curly's Barbecue, Kretschmar Deli and Smithfield Marinade saw double-digit revenue growth.

Smithfield said it reduced its debt by $913 million so far this fiscal year, bringing its total debt level to $2.1 billion.

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